The San Jose Redevelopment Agency has spent more than $52 million in the past five years to buy a dozen properties around town. The reasons have ranged from building high-rise housing to attracting a baseball stadium. But in most cases, the land remains undeveloped.

The agency’s avowed strategy – to control key parcels that can further the city’s multibillion-dollar urban renewal effort – has served it well over the past three decades. City officials note that they have been able to boost downtown by buying and holding land while waiting for the right project.

But given how far downtown has come in the last three decades, some critics say the city should now adopt a more rigorous process to decide which land to buy and what to do with it.

Bob Brownstein, budget adviser to former Mayor Susan Hammer, argues that the city no longer needs to bend over backward to attract developers. “In 1980, if you could get someone to show up, you’d say ‘We’ll take it,’ ” said Brownstein, now the policy director at Working Partnerships, a union-affiliated think tank.

He contends that the agency should consider potential benefits to San Jose’s cash-strapped general fund, which pays for most of the city’s annual operations, when buying land or subsidizing developers. Although the agency has a hefty $200 million budget for capital expenditures and investment, fed by assessments on property in its 16 redevelopment areas, the general fund is riddled with multimillion-dollar shortfalls year after year.

Asking how many high-paying jobs a given project might one day produce before deciding to invest could help the city plug those deficits, Brownstein says.

City officials counter that longstanding goals to draw more retailers to the city core – and more residents to shop there – are more important than strict return on the dollar.

For example, San Jose in 2001 acquired the 1.1 acres of land where the ritzy Three Sixty Residences high-rise is now going up for $10 million – and sold it nearly four years later to the project’s developers for the same amount.

‘Corporate welfare’

Doug McNea, president of the Silicon Valley Taxpayers Association, looks at such deals and labels the redevelopment agency “a corporate welfare system.”

But agency chief Harry Mavrogenes said the weak economy has forced his team to pursue increasingly creative ways to cut deals. Added deputy executive director Janet Kern: “It’s challenging to get developers, because nobody knows what the market is doing right now.”

In another instance of a deal done for reasons besides strict financial return, the agency purchased land at 438 Coleman Ave. for $815,000 and now leases it for $1 a year to the Friends of Guadalupe River Park & Gardens. The non-profit oversees a three-mile stretch of park land that runs along the river from downtown to the airport.

Other parcels the agency has snapped up might not be developed for years – if at all. Those include the shuttered Camera One cinema building near the Three Sixty Residences and a former auto-body shop on King Road on the East Side, which Mavrogenes said is being considered for everything from housing to retail to a mixed-used combination of the two.

City leaders contend that rolling the dice on land when it becomes available – even before there’s a legitimate project before them – has been a wise way to spend the public’s money.

‘We can be patient’

“We are going to be around a long time,” said Mayor Chuck Reed. “We can be patient. It gives us more development opportunities if we control the land.” Indeed, the dozen parcels represent just 19 percent of the 2.5 million square feet of property the agency owns around town, most of that in the city core.

Reed also noted that, while the redevelopment agency does run a financial analysis on private projects in which it plans to invest more than $1 million, doing a substantive analysis when buying every piece of land is unrealistic “unless you are willing to make a lot of assumptions.”

And sometimes, the agency’s best-laid plans run aground, forcing officials to vamp. San Jose has spent a collective $20.2 million since 2003 on five downtown parcels near the Diridon train station. The city started buying those parcels in hopes of building a baseball stadium and luring the Oakland A’s. Such a deal never happened.

Still, planners are moving ahead with more purchases in the area, which they now say would be a perfect site for a major corporate headquarters – a company on the scale of eBay or Adobe Systems. Ultimately, the redevelopment agency dreams of acquiring 13 parcels over 13.5 acres for a massive development that also would include 800 homes, stores, restaurants and office space.

A spokesman for the California Redevelopment Association – a trade organization made up of redevelopment agencies across the state – said the city’s approach could well pay off. “In order to do a project, oftentimes you need to assemble a number of smaller parcels,” said Tom Hart. “What San Jose has done is a wonderful illustration of how it works.”

But McNea calls the phantom ballpark project emblematic of the agency’s wasteful spending. For every success, he said, there are more examples of failure.

“After all these years of redevelopment downtown,” he added, “San Jose is still not a destination.”

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